Information On Mutual Funds

A professionally-managed fund which helps in pooling the savings of investors and investing that money in various securities like bonds, shares, commodities and short-term instruments in the money market is known as a mutual fund. All the investors in the mutual fund have the same financial goals and their money gets invested in varied asset classes depending on the investment objective of the fund. The biggest advantage of the mutual fund investments is that it promotes a small amount of money and investors gain from it as their money gets managed by finance professionals.

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The mutual fund investments are managed actively by professional fund managers. The funds get diversified to offset the potential losses. They are one of the best options for investing your money as it does not require your constant attention or there is no high fees attached to it. It is the best choice for people who do not have the knowledge or time to make complex and traditional investment decisions. Once you put the money in the mutual fund, you will be permitting the fund manager to make the decisions for you.

Different types of schemes available

Close-ended fund- These funds have a specific maturity period of 3-6 years. When it gets launched initially, these funds will be open for a particular period for a subscription. All the funds will be listed on the recognized stock exchange.

Open-ended funds- These funds are available for subscription on a continuous basis and also can be redeemed any time. Throughout the year, it would be available and the investors could sell or buy the units at their NAV related prices. There will be no fixed maturity date for these funds. The main feature of the open-ended fund is its liquidity.

Interval funds- These funds combine the close-ended and open-ended funds. The interval funds get traded on the stock exchanges. They are open for redemption or sale on prevailing NAV price at pre-determined intervals.

Based on investment objectives, the different types of mutual funds available are: